Fiscal Policies and Trade: On the existence of Nash equilibria
This paper studies the existence of a fiscal Nash equilibrium in a multi-country model of trade where the relative prices are the channels of transmission of scal policies between countries. We stipulate the necessary conditions on goods, consumptions and trade that allow for the existence of a Nash equilibrium in the fiscal game. In the particular case of homotethic utility functions, we show that conditions on the shape and the degree of the curvature of the relative prices functions are sufficient to guarantee the existence of the Nash equilibrium.
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